State Should Proceed with Caution before Integrating Long-Term Care

The author writes: “We cannot afford to dismantle a system that is highly effective.”
February 16, 2011 -- Oregon has a cost-effective long term care system that provides choice, independence and dignity to seniors and people with disabilities.
It’s a model that many states are looking to in efforts to shift from institutional care to home- and community-based services.
While we must focus on the impact of an aging population and develop strategies to address that impact, we should be cautious in how we move forward to avoid unintended consequences that negatively impact Oregonians of all ages, and devalue Oregon’s nationally recognized model.
Governor Kitzhaber’s diagnosis of the ills of our health care system is solid, but the prescription must be evidence-based and “do no harm.” We cannot afford to dismantle a system that is highly effective (our long term care/home & community-based system) to help a dysfunctional system (acute and primary care).
State policymakers should not have a false sense of security that they can sign a contract with a managed care company, pass on the responsibility and keep a lid on costs. Ultimately the state will still be responsible for quality and cost. Managed care should be explored with caution and no one should be counting on it as the magic bullet for controlling long term care costs over time.
When applied to long-term care, AARP favors the concept of managed care based on a medical home model with care managed and coordinated by a physician or medical group practice, operating independently from providers of long term care, and with the mission of coordinating care across all providers and settings (physicians, hospitals, clinics, residential settings, nursing homes, home care, etc.) to provide the individual with the best care in the setting that ensures the maximum appropriate level of independence. Provider networks should be constructed based on objective data on quality and should be broad enough to ensure that individuals are able to obtain appropriate care within their own communities. 
However, there are also a number of risks:
Service and quality reductions – To stay within the capitated rate, contractors have an incentive to squeeze providers who in turn have an incentive to reduce services or skimp on quality. This is a particularly concern in the current budget environment where providers are already being squeezed and there have already been arbitrary, across the board cuts to home care hours and other long term care services.
- Continuity of care and stability of the network – If contractors are constantly shopping for the cheapest provider and the provider network is not stable - this can hurt consumers – by for example forcing them to move from one care provider or facility to another.
- No guarantee of cost savings–Studies on the cost-effectiveness of Medicaid Managed Care LTC programs is mixed and inconclusive. The danger is that you would be adding another layer of bureaucracy between the state and LTC/HCBS providers without adding value.
AARP’s Public Policy Institute has noted that there other options that might improve the coordination of care without fully integrating as a capitated program our LTC/HCBS system with other systems (medical and/or mental health).
First, the Affordable Care Act of 2010 offers several opportunities and funding including:
  1. Hospital Readmission Reduce Incentives (Sec 3025)
  2. National Payment Bundling pilot focused on bundling for episodes of care (not just DRGs) (Sec 3023)
  3. Community-based Care Transitions program promoting partnering with community-based organizations (Sec 3026) that builds on Aging & Disabilities Resource Centers (ADRC) approach already piloted in Oregon.
  4. Independence at Home Demonstration starts in 2012 with Medicare paying for house calls and a focus upon chronic care (Sec 3024)
  5. Community Health Teams created to support interdisciplinary team infrastructure and address workforce needs for medical homes model (Sec 3502)
  6. Medicaid Health Homes for Chronic Conditions includes 90% federal match (Sec 2703)
Consumer Choice: AARP finds that this is a paramount feature. Those directly affected are best able to gauge the adequacy, quality and customer service provided by a health care system. Market competition provides a direct and immediate way of ensuring good quality that, from the consumer perspective, is far superior to government oversight and retrospective review.   If consumers have choice in selecting from an array of managed care plans and the ability to change plans, the plans will be highly motivated to provide quality care. Conversely, if plan enrollees are captives, there is little motivation to provide high quality or good customer service. We probably all have has some experience with monopolies that we had to deal with that provided poor quality or customer service (cable, phone, DMV, IRS, etc.) 
Accordingly, we support consumer choice, in the following decisions: (1) to participate in managed care; (2) to select from among competing managed care plans; and (3) to select among the direct care providers within a plans network. This could be coupled with financial incentives for plans and network providers tied on their ability to attract and retain consumers. In addition, government oversight should include “exit interviews” of consumers who leave plans to mitigate attempts to “lemon drop” those who have high medical needs. 
Bottom line: AARP has long been an active supporter of initiatives to make health care more coordinated, integrated, and consumer- and outcome-oriented.   We also support efforts to control healthcare costs through greater efficiency or systems changes that foster better care (e.g., reducing medical error and hospital readmissions, duplication of tests, and less use of institutional care when community care would be more appropriate).
Combining improved care management and cost containment can best be achieved by careful balancing of systems to ensure quality and patient protection.   Each proposed system and its component elements must be closely examined.

Jerry Cohen is Oregon AARP State Director.


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Thank you for the important work you are doing on behalf of our frail elderly. Handing Oregon's model long term care system over to the same people who have made a mess of of health care system would be a grave mistake resulting in higher costs, lower quality care and services for the elderly and a more medicalized model. Managed care has been a failure in controlling long term care costs in the few places that have attempted it. The governor's budget is simply shameful and his proposal to capitate long term care and give it to the bottom line oriented managed care/acute care industry is wrong-headed. If it ain't broke, don't fix it.